The U.S. federal government's gross debt jumped from US$23.5 trillion in February 2020—when the pandemic was just beginning—to US$30 trillion today. Originally, the Congressional Budget Office (CBO) projected that the US$30 trillion mark would be reached by the end of 2025.

The main reason for this increase is the extraordinary expenses resulting from the relief measures implemented to combat the economic effects of COVID-19, estimated at US$5 trillion.

There is a consensus among economists and politicians that this extraordinary spending was necessary to prevent the economy from collapsing. With interest rates in negative territory, the cost of this debt was manageable. Interest payments as a proportion of GDP are at historically low levels, Treasury Secretary Janet Yellen noted a few weeks ago.

However, the prospect of faster interest rate hikes due to the strong inflationary pressures that have taken hold in the economy has changed the outlook. The CBO estimates that, if interest rates rise in line with its projections, net interest payments on federal government debt would reach the equivalent of 8.6% of GDP by 2051.

The CBO projects that the federal government's gross debt will reach US$41 trillion by 2031, equivalent to 122% of GDP, slightly lower than the current level of 125%.

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